The Environment and Directed Technical Change

By Daron Acemoglu, Philippe Aghion, Leonardo Bursztyn, David Hémous. The American Economic Review, 2012

3,326 citations recorded by the source corpus.

This paper introduces endogenous and directed technical change in a growth model with environmental constraints. The final good is produced from “dirty” and “clean” inputs. We show that: (i) when inputs are sufficiently substitutable, sustainable growth can be achieved with temporary taxes/subsidies that redirect innovation toward clean inputs; (ii) optimal policy involves both “carbon taxes” and research subsidies, avoiding excessive use of carbon taxes; (iii) delay in intervention is costly, as it later necessitates a longer transition phase with slow growth; and (iv) use of an exhaustible resource in dirty input production helps the switch to clean innovation under laissez-faire. (JEL O33, O44, Q30, Q54, Q56, Q58)

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/7eface92773923144d463a93f13645174d787e18

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Citations in the corpus

Directing technical change from fossil-fuel to renewable energy innovation: An application using firm-level patent data (2015, positive): “Recent theoretical work on directed technical change aims to investigate the factors that can induce a relative shift towards clean technologies and away from dirty ones at the aggregate level (Acemoglu et al., 2012a; Smulders and Nooij, 2003; Di Maria and van der Werf, 2008).”
Environmental Regulation, Green Innovation, and Industrial Green Development: An Empirical Analysis Based on the Spatial Durbin Model (2018, background): “Some scholars put technical progress, environmental quality, and economic growth into a unified analytical framework, and put forward the concept of technological progress bias, energy conservation, and cleaner production—that is, green innovation [27,28].”
A Third Wave in the Economics of Climate Change (2015, background): “Innovation is a path-dependent process and if the share of resources devoted to dirty energy research is too great, it may be impossible (i.e. too expensive) to take the economy along a clean-energy path (Acemoglu et al. 2012; Smulders and DiMaria 2012; Aghion et al. 2014a).”
From financial instability to green finance: the role of banking and credit market regulation in the Eurace model (2019, background): “More recently, Acemoglu et al. (2012, 2016), building on pioneering work on the interaction between endogenous innovation and environmental policies, see e.g. van der Zwaan et al. (2002); Popp (2004), introduce a comprehensive growth model with environmental constraints characterized by endogenous a”
Modelling innovation and the macroeconomics of low-carbon transitions: theory, perspectives and practical use (2019, background): “…Evolutionary Economics (Freeman & Louçã, 2001), Sustainability Transitions Theory (Geels, 2002), Energy Technology Innovation Systems (Hekkert et al., 2007; Grubler & Wilson, 2013), directed clean innovation (Acemoglu, 2002; Acemoglu et al., 2012), and ‘planetary economics’ (Grubb et al., 2014).”
Subsidizing Renewable Energy Under Capital Mobility (2014, positive): “Related is the argument developed by Acemoglu et al. (2012) who use a growth model in order to show that a green research subsidy may induce an efficiency-enhancing change of private R&D policy from dirty to clean technologies.”
Learning or Lock-In: Optimal Technology Policies to Support Mitigation (2011, background): “But other researchers maintain that policy intervention is necessary: Some identify spillovers as the cause of suboptimal innovation in carbon-free technologies (Kverndokk and Rosendahl, 2007; Fischer and Newell, 2008; Popp, 2006) while others see an initially high innovation rate in the carbon-inte”
Too late, too sudden: Transition to a low-carbon economy and systemic risk (2016, background): “Acemoglu et al (2012) reinforce the argument for an early intervention alluding to its virtuous dynamic effects on endogenous technical change and growth, especially if carbon taxes are accompanied with subsidies to relevant R&D activities.”
Macroeconomics of sustainability transitions: Second-best climate policy, Green Paradox, and renewables subsidies (2011, background): “Of course, the pricing of greenhouse gases and technological progress in renewables are not independent, alternative strategies, since a high price of CO2 (as well as technology-specific policies) encourages the re-direction of technical change towards renewables (Acemoglu et al., 2010).”
Directed Technical Change as a Response to Natural Resource Scarcity (2021, background): “Acemoglu et al. (2012) consider the direction of technological progress with respect to clean and dirty energy but do not examine the saving on energy vis-à-vis other inputs.7 This literature alsomakes clear that even though there are very large remaining deposits of fossil fuel in the world, we…”